Was Wells Fargo in cahoots with Prudential Insurance to open bogus life insurance policies?

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Was Wells Fargo in cahoots with Prudential Insurance to open bogus life insurance policies?
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Wells Fargo has had one heck of a year. From the revelation that bank employees were opening up phantom accounts to the company actually losing it BBB accreditation, the beleaguered bank has struggled through one snafu after another.

Now the latest shoe to drop is a report that Wells Fargo was in cahoots with Prudential Insurance to sign bank customers up for insurance policies they didn’t know about or want.

Read more: AT&T agrees to $88 million refund for victims of mobile cramming

Fraudulent openings of 15,000 life insurance policies at Wells Fargo?

We already told you how Wells Fargo knowingly stuck a homeowner with costlier flood insurance and then gave him the runaround when he wanted to get the matter cleared up.

But this is a different insurance-related matter…

A new report in the New York Times says three Prudential whistleblowers allege Wells Fargo bankers were actively encouraged to sign customers with limited English proficiency up for the MyTerm insurance policy — without telling them.

And then to add insult to injury, the premiums reportedly were being directly deducted from the customers’ accounts!

Each new account opened got employees closer to their quarterly sales quotas. Some 15,000 MyTerm accounts have been investigated for being opened, closed and reopened again to allegedly boost sales numbers.

The whistleblowers who were fired from Prudential are now suing. Among the allegations they make in their suit is that the policies were mostly opened on account holders with ‘Hispanic-sounding last names concentrated in southern California, southern Texas, southern Arizona and southern Florida.’

Several clues tipped the whistleblowers off about what was going on. Among them were addresses on the applications like ‘Wells Fargo Drive’ and supposedly legit email addresses like [email protected] being listed as cell phone numbers!

The average annual premium on a MyTerm policy is $288.71. That’s almost twice as much as the $150 that industry groups say a healthy 30-year-old man should pay for a $250,000 level-term policy for 20 years.

Six common questions about life insurance answered

Insurance industry research group LIMRA reports that three out of five Americans own a life insurance policy, which is great!

The bad news? Another 40% of us have no coverage in place in the event of our untimely passing.

A lot of people shy away from life insurance simply because they don’t understand it. Here are some common questions about life insurance and the answers you need to know to make an informed decision.

Read more: The top life insurers of 2016

What kind of life insurance do I need?

Clark recommends what’s called level term insurance.

‘Level term’ means you pay one flat rate year after year for the length of the policy. This policy will replace your income should you die prematurely.

You buy it for periods of 20 or 30 years and the premium stays the same during the life of the policy.

How do I shop for it?

You can comparison shop for term life insurance quotes at any of a number of sites like HavenLife.com, Quotacy.com, PolicyGenius.com, 1stOptionInsurance.comInsure.com, AccuQuote.com, or QualityTermLife.com.

By shopping online, you avoid an insurance salesperson trying to up-sell you from level term coverage to another insurance product that may be unsuitable for you.

Can I afford it?

Yes! One non-profit insurance industry group says that a healthy 30-year-old man can get a $250,000 level-term policy for 20 years at a cost of less than $13 a month.

That’s around $150 a year…and the price never goes up with a level-term policy!

How much coverage should I buy?

When it comes to the question of how much you should buy, people can get crazy with all kinds of complicated formulas. Clark says that you should buy six to 10 times your annual income.

Should I get it through work?

This is a popular option for a lot of people. But it’s often better to qualify on your own and go through medical underwriting so you can buy a policy independent of your employer.

The reality is most of us don’t stay at the same place forever and you may not have a right to take that insurance with you.

Do I really need it?

Does somebody depend on you? Do you have young kids or a spouse or significant other that depends on you financially? Then you need life insurance!

And don’t forget about stay-at-home spouses. Should a stay-at-home spouse pass away, the remaining parent would have to suddenly pay for childcare and everything else a stay-at-home parent does on a day-to-day basis. That’s why it’s essential the parent at home have a policy too.

Don’t have any one who financially depends on you? That’s the only time you don’t need a policy.

Read more: Couple denied travel insurance claim because of cancer diagnosis

The #1 way to save money on your auto insurance in the long run

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Theo Thimou About the author:
Theo is director of content for clark.com. He has co-written 2 books with Clark Howard, including the #1 New York Times bestseller Clark Howard's Living Large in Lean Times.
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